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Getting Stimulus Backwards

Even “right wing” economists like Jim Hamilton and Alex Tabarrok (and Tyler Cowen in other entries on Marginal Revolution) support short-term federal aid for state budgets (and even, perhaps with qualifications, long-term spending on major infrastructure projects) — exactly the categories of spending that “right-wing” and “centrist” politicians stripped from the Senate version of the stimulus bill, to great applause from the media.

I suspect Jim and Hamilton and Tabarrok would tell me that I shouldn’t be surprised to learn that the political system is dysfunctional. But I genuinely don’t understand why it’s failing to function in this particular way. It seems to me that there ought to be strong interest-group politics behind state and local financial aid coming from public employees, and senators of all parties should be facing strong pressure from governors back home to do this. On top of all that, incumbents everywhere have a stake in actually turning the situation around with effective policy since an economic collapse will have unpredictable and frightening events for incumbents. The architects of the Senate compromise just seem to be slightly dim-witted.